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U.S. Services Rebound, Hiring Lags as Tariff Costs Rise and Markets Trim Fed-Cut Bets

Survey signals are carrying extra weight as a prolonged shutdown withholds key government reports.

A man looks at a stock quotation board displaying the Nikkei share average outside a brokerage in Tokyo, Japan, October 21, 2025. REUTERS/Manami Yamada/File Photo
People walk at a shopping area of Shinjuku in Tokyo, Japan, September 11, 2025.     REUTERS/Fabrizio Bensch
FILE PHOTO: A view shows the New York Stock Exchange (NYSE) Wall Street entrance in New York City, U.S., April 7, 2025. REUTERS/Kylie Cooper/File Photo/File Photo
The moon rises over the Toronto city skyline as seen from Milton, Ontario, Canada, January 23, 2016.    REUTERS/Mark Blinch

Overview

  • ISM’s services PMI rose to 52.4 in October, an eight‑month high, with new orders at 56.2 and prices paid up to 70.0.
  • The services employment index stayed below 50 at 48.2 for a fifth month, and regional Fed reports point to near‑flat hiring despite firmer orders.
  • ADP reported private payrolls increased by 42,000, offering a modest counterpoint to soft employment readings in diffusion surveys.
  • The government data blackout continues, with the CBO estimating the shutdown could subtract 1.0–2.0 percentage points from fourth‑quarter GDP.
  • Supreme Court justices questioned the legal basis for President Trump’s broad tariffs, with a decision expected next year, as risk sentiment improved and traders reduced the odds of a December Fed rate cut.